Advantages and disadvantages of credit card
8 benefits of a credit card
– The credit card is a convenient payment method to procure goods and services, whether in person, online or by phone.
– If you always pay your bill in full each month, you pay no interest on your purchases.
– A credit card can help you build a good credit rating if you make all your payments on time.
– From the point of view of security, a credit card is preferable to cash.
– If you steal your credit card, or if it is being used without your permission, you are usually not required to pay for purchases you did not make.
– Many issuers of credit cards offer rewards and benefits such as travel points, insurance or extended warranties on products purchased through credit card.
– There are credit cards designed for students and seniors.
– If you have a good credit rating, you may qualify for a credit card at a reduced rate.
6 disadvantages of credit card
– Because credit cards provide easy access to funds, some people may end up with serious financial difficulties because they are likely to spend impulsively, and without knowing whether they will be able to repay.
– The interest rates on credit cards are usually higher than the interest rates on purchases and cash advances made through a line of credit or a personal loan.
– If you do not pay your balance in full at maturity, each month, you may end up paying a lot of interest.
– For cash advances, you must pay applicable interest from the date the funds are withdrawn until the date of repayment of the borrowed money.
– If your credit card gives you points for travel, insurance, or low interest rates, you may need to pay an annual fee.
– If you’re struggling to make minimum payments required due date, your credit rating may suffer and you may have trouble getting another type of loan.